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I had to read it twice

Do you know the muffin man?

On this link you'll find an interview of Rafael Correa done by Radio Netherlands Worldwide (a world service for tall thin people who wear orange). The reason I had to read it twice? It's fair. It was so bizarre to read a balanced article about Studmuffin in the English language, and your gobsmacked Otto strongly recommends that you click that link above and do the same. Highlights include:
  • Somebody actually writing in English the fact (remember facts?) that Correa is in fact popular in his country (somebody apart from me, that is).
  • Rafa explaining what equality really means in Ecuador, and how indigenous revenge on the criollos won't happen on his watch.
  • How Ecuador spends a hatful to patrol that now famous border with Colombia while its neighbour just throws bombs over it.
  • How Ecuador is different from Colombia, Peru and Bolivia because it has an anti-cocaine policy that actually works.
Radio Netherlands Worldwide don't just paint everything rosy, though. They do what journalists are supposed to do, i.e. give you both sides of the story and let you decide yourself. Nice to know somebody still cares about things like that, so applause and kudos to you Dutch guys. By the way, the 60% approval mentioned in the article does go against the very latest opinion polls a tad. In May/June Correa was down to 53% approval, but in the June/July poll published yesterday Studmuffin clicked up a point to 54% approval. If you look back at the last 20 years of Ecuadorian politics, you'll understand above 50% after a year in office is quite an achievement there.

Paraguay gets ready

President elect Fernando Lugo proves to the world he
has a left hand. And a nice smile.

On August 15th, Fernando Lugo becomes the new President of Paraguay. It promises to be a special occasion, not least because it will be the first time in 60 years that Paraguay's Colorado (Red) party has not held executive power. Lugo has already set his stall out by visiting Bolivia, Argentina, Ecuador, Venezuela and Nicaragua in quick succession, and although in gringolandia judgement is being withheld there's not going to be much surprise down here when his gov't turns out as socialist (at least with a small "S").

So what to expect from the Lugo gov't? Well for a start, many Paraguayan political analysts say that Lugo may be left leaning, but he will find it tough to push his proposed reforms through the notoriously corrupt National Congress (more on those guys later). His party is made up of a centre-left to left-left alliance, each with their own list of important things to do, and in that way Lugo's situation reminds me of that of Studmuffin Correa and the ongoing balancing act he is forced to perform in Ecuador. As for a list of things to do, a good idea of the main issues can be found in the respected polling firm "Transparencia Paraguay" (no translation needed) and its recently published national survey available on site in powerpoint (click on the blue link marked "encuesta"). Angus Reid Monitor reported on the survey in English (link available here). In its survey, TP found that unemployment was the main issue to be tackled by the incoming gov't, with 38.6% of people voting it the top concern. Then came crime (19.9%), corruption (18.1%) and economic crisis/hunger (8.5%) as main concerns.

TP has been applauded for its work on fighting corruption in Paraguay, and a problem it is with 96% of Paraguayans saying their country is "very corrupt". Another part of the latest survey highlights the most corrupt institutions in the country, which according to the survey are:
  • The National Government
  • The National Police Force
  • The National Congress
  • The Transit Police Force
When the most corrupt sectors of society are those that make and enforce the laws, it's not the kind of corruption that is easily fought, it has to be said. So the fruitfly analyses of the close-to-unreadable Latin Business Chronicle that call for an immediate shift to a free market economy (or in other words, put the corrupt institutions into direct contact with foreign direct investment capital) are as laughable as they are irrelevant. Honestly, these people should cross the Rio Grande from time to time.

What we are likely to see is Lugo attacking the issues of poverty and employment before starting to weed out the corrupt, because those problems are easier to tackle. For sure, there will be howls of commie from the people who are never happy with anything situated left of Cheney, but realpolitik will lead the way. Lugo is likely to demand (and get) more revenue from Paraguay's share of electricity production at the massive Itaipu generation plant it shares with Brazil, and with this extra revenue set up social missions along the lines of the successful bodies in Venezuela.

It promises to be a fragile few years in Paraguay, and if things go wrong for him it should be remembered that in surveys last year, over 50% of the population said it was happy to live under a military dictatorship. There's a long way to go before the country is weaned off that idea, and once the honeymoon period is over Lugo will have a tough job on his hands. I wish him the best of luck, especially as I have fond memories of my times in Paraguay. It's difficult to find a friendlier race of people.

Aurelian's CEO has suddenly changed his tune

Another rich Canadian actor

The volume is already being turned up on the Aurelian/Kinross deal cacophony, so rather than repeating my stated opinions on the issue (read 'em here, here, here, here and here if you can be bothered) let's have a look at the opinions of the people that really matter and see if there's anything we can learn. The place to go is the centre of the storm, Aurelian's CEO Patrick Anderson. In this linked report published today in Canada's National Post (NP), Anderson is quoted as saying the following:

"And what if the Mining Law isn't favourable? Or what if it's only favourable to a corporation that can take on bigger risks than we can? There are lots of factors."

"I think Kinross is well-positioned to work with the government in ways we never could. They've got experience in jurisdictions the Ecuadorian government quite likes such as Brazil and Chile, and a great [corporate social responsibility] reputation in those countries."

These were the only two direct quotes from Anderson in the report, but the rest of the note seems to have been influenced by the conversation the reporter had with the CEO. You'll get the feeling from the intro which goes:

Aurelian Resources Inc. was in a tough spot before Kinross Gold Corp. came calling. The company's Fruta Del Norte gold deposit in Ecuador ranks as one of the best discoveries in decades. But its stock price was floundering because of the huge political risk in Ecuador and the lack of a firm mining code in the South American country. The Ecuadorian government is working on a Mining Law that appears to be favourable to the companies, but that law is likely months away from reality, if not longer.

For the record, I don't think ARU was in a 'tough spot'.I think the stock price was floundering due to perceived political risk and price manipulation in Canada, not due to any true 'huge political risk'. I don't think the new law is 'months away'. In fact I'm 100% certain it's ready now and being sat on by Correa until the constitutional referendum is over. Which is a bummer, but what can you do?

So although I strongly disagree with the inference of the NP article's intro, such prose is only attributable to Anderson via the reporter as filter. Therefore let's concentrate on those direct Anderson quotes. "What if the mining law isn't favourable?" were Anderson's words. It's a fair question (albeit rhetorical). However, the same Patrick Anderson was quoted as saying the following just seven days earlier, on 18th July:

“An earlier version of the draft law posted on the Ministry of Mines and Petroleum's website was reasonable. We are confident that President Correa wants to see a responsible mining industry in Ecuador”

If we assume that Patrick Anderson was being honest in both occasions (and I certainly hope for his sake he was being honest in both, but particularly the second one as it was part of an official company press release), his confidence suddenly melted into doubts and fears as soon as the first takeover bid was made. In less than a week. Strange coincidence in timing, no?

As for the second quote, it may well be true that Kinross is well positioned in Ecuador, and it may also be true that Kinross enjoys a great reputation in Brazil and Chile. However, Aurelian has always, always laid claim to its own great reputation in a country far more pertinent to this issue, namely Ecuador. Is ARU suddenly saying that its own reputation isn't good enough? If that is the message, then it would seem the company has been hoodwinking shareholders all this time.

Also interesting was this report from Bloomberg on Thursday which has the CEO of Kinross saying that there are "no surprises" in the new mining law and that KGC has had a number of meetings with the Ecuadorian gov't and officials. How would KGC know that the new mining law contains no substantial surprises and ARU claims ignorance? Is it just me, or can anyone else see a glaring hole in these side-by-side statements?

There is a lot more noise on the stock from bit players, and if I wanted this post could turn into a 5,000 word rant about it all. Just as one example, the Haywood analyst covering ARU calls the Kinross offer "reasonable", when that same firm blatantly manipulated the market back in April by issuing a sell recommendation and a $1.40 share price target on ARU, then on the very same day buying blocks of shares from those that panicked at $3.50. Does Haywood seriously think its opinion counts any more?

As said, just one example of the BS noise and chatter around ARU now. But my previously stated belief that ARU has chickened out and accepted a lower-than-lowball bid as friendly due to sheer cowardice has only been strengthened today by the obvious doublespeak from its CEO. As mentioned previously, I do think a counter bid is possible. Not probable, but possible. However, if it comes it will not be due to the skills of Aurelian management, in fact quite the contrary. Any counter offer would come despite the total stupidity shown by the board of directors at Aurelian.

The bottom line is that Kinross is laughing at you, Anderson. They saw you sweating, threw in a lowball and you caught it. Stick to geology next time, cos you are no businessman. In fact, not even the suffix "-man" applies from where I'm sitting.


Gone fishing, Antamina style

The Antamina mine in Northern Peru is the world's 4th largest mine.

A couple of weeks ago I reported in this linked post on a welcome initiative at Codelco Chile, where the up to now underused tailings pond has been equipped with dinghies, thus allowing workers to enjoy a spot of leisure sailing. So as it's the weekend, I thought I'd post on the originator of the so-called "mining environmental leisure activity" movement, that of the Antamina Fishing Club (El Club de Pesca de Antamina) in Northern Peru. This is because although the project is famous in mining circles, it is often less well-known to the general public and deserves greater exposure.

The main tailings pond at Antamina

Back in 2005 when the giant Antamina copper/zinc mine in the Ancash region of Peru was undergoing extensive expansion to its production facilities, a few of the contracted workers released some 50 or so trout into the site's main tailings pond as an experiment. Once the fish were found to be thriving, they went to management and told them what they had done. The brass at Antamina (jointly owned by Xstrata 33.75%, BHP Billiton 33.75%, Teck Cominco 22.5% and Mitsubishi 10%) immediately saw the possibilities presented to them, and proceeded to stock the pond with over 10,000 brown and rainbow trout. The fishing club was organized, and from that moment the approx 1,400 workers at Antamina have enjoyed a leisure activity that allows them to relax at the end of the day, or even between shifts.

The Antamina Fishing Club (June 2007)

The Antamina Fishing Club has taken the social movement a step further, as although none of the trout caught are ever thrown back, any single angler can only take home two fish for his own plate. Any other fish caught are donated to the local communties and schools. All in all, a very commendable project that benefits both the workers at Antamina and an appreciative local community. Kudos to the folk at Antamina for setting such a good example of community relations.


In a shocking development, President Hugo Chávez Frias of Venezuela was today arrested by Spain's national guard after demanding money from Spain's Head of State, King Juan Carlos de Bourbon.

According to sources, Chávez demanded a sizeable sum of money from the king as damages to repair his hurt feelings due to last year's "why don't you shut up?" incident that marked the end of his absolute dictatorship rule over the Spanish sub-principality of Venezuela. When the king refused him point blank, Chávez became aggressive and had to be restrained by several of the armed security guards on duty.

Chávez is now said to be under lock and key in the royal dungeons, awaiting the Spanish Inquisition. His last words on being dragged away were, "I didn't expect this".

This exclusive news story was brought to you by Inca Kola News, dept of "tell em what they wanna read". Rights purchased from The Miami Herald.

Trading Post (voluminous edition)

Volumes traded are the whole story here. Blame a little on the summer season, blame a little on the fact it's Friday, but the real blame lies with market fear. Everyone nervously asking " buying?" and nobody answering.

I've been fortunate with Colossus Minerals (, having bought at $2.80 and sold around the $3.50 level. It's now back at $2.75, but the low volumes put me off jumping in again. I'll be watching for news, as it should be ready to cough up another PR with gold intersections soon.

Fortuna (FVI.v) is recovering a bit from yesterday's dumperooney. It must be the new advert :-). Volume is low, that's all there is to say. Now's the time to do the buying bit of a 'buy'n'hold' strategy.

PCU is doing nicely, and my ST trade is firmly in the winning column. A nice way to finish the week. Not taking profits just yet, as reports of copper's demise were greatly exaggerated this week and a rebound in spot is in the cards early next week.

Petrobras (PBR): today's news smacks of desperation

With the share price dropping...and dropping....and dropping, the rabid retail longs who savaged anyone who dared to talk a little common sense about PBR are now conspicuous by their absence. But it now looks as though Petrobras itself is sweating on its PPS, cos Bloomie today has them talking up future production at its Tupi offshore field (here's the bloomberg link).

PBR pum...OOPS!! SORRY!!.... promotes the fact that Tupi will be good for a million barrels a day, and starts delivering in 2010. What gets ...errrm....'lost in translation' is that the first spudding happens in 2010, and it'll take a whole lot longer than 2 years to get 1mbbl/d flowing from the years longer. And then there's the tiny little fact that PBR has already said Tupi is mostly natgas....I can only suppose they were talking about barrel equivalents and that got 'lost in translation', too. Ahem.

And then there's the whole concept of how they're going to pay for the development. And this is when the investor should be reminded (once again) that Petrobras is state controlled. Y'know, one of those nationalized companies that the free market hates right up until the moment it suits them to be totally hypocritical "four legs good, two legs better" about it. And what nationalized companies do is put the country before the bottom line. So when it comes to capex needs, expect them to suck net earnings to nothing while the expansion phase is on. This is most definitely not Exxon Mobil, dear reader.

Maybe rampant longs have learned their lesson over the last few weeks. Maybe not. But once again, I advise caution with PBR as an investment, and laugh my socks off at the fools from the very large WallSt houses who have showed themselves as total LatAm greenhorns with bandwagon buy recos at the top of the stock. Just as one example, JP Morgan upgraded PBR to overweight on June 27th with the stock at $69. Here we are less than a month later at $52. Nuff said.

A final thought; after all the hype we've had to swallow from the stuffed suits, it's interesting to compre the PBR 1 year chart above to this one, showing WTI crude spot for the same period. Y'know, in the end, PBR is just another oil stock. Tupi? Carioca? Brazil? Investment grade? Total BS! It's just another oil stock...and a nationalized one, at that.

Don't say i didn't warn you dudes...........

Southern Copper (PCU) results

I also like the spike bottom it's putting in here

PCU announced its 2q08 earnings after the bell yesterday. The first thing you do is look beyond the headlines, and the headlines have been pretty uniformly "PCU earnings down 24% on lower output", or words to that effect. The only people this will surprise are those who don't follow the stock, and they don't concern us anyway.

The ongoing strike in Mexico added to stoppages in Peru did the damage here, and while the industrial dispute continues it is a dark cloud over the company. Not a black cloud, but yes a dark one. I personally wish the management would climb down from its arrogant high horse, cut a deal with the Mexico unions and get back to work, but WTFDIK? Costs are up, but again that surprises nobody who follows the stock. Think fuel. Think acid. Think truck tires. In fact, just think.

Back to the earnings report and how things look for the future. The EPS is 62c, which is 3c below street estimates. This doesn't bother me either, because coverage on the stock isn't very deep, and those that cover PCU couldn't call a taxi, let alone the stock. By simple extrapolation gives us a PE of 11X. Perfectly acceptable as things stand, as nearest neighbour FCX runs an 11.5X multiple.

So let's keep things very simple (as is my wont on this blog) and imagine the news hits that the strike is settled tomorrow. We add 24% to earnings and PE goes to 9X immediately. This would put it at a pretty neat premium to peers (again, such as FCX at 11.5X). And this is why PCU makes sense as an investment. Aside from the fact that copper is not going to drop by any significant amount until my daughter reaches university, PCU is trading at an attratcive mulitple even under the current strike conditions. The dividend is large yield and regular, and once the strike is settled (these things don't go on for three years, not even in Mexican-stand-off-land) the company will revalue quickly.

Disclosure: I bought a trading block yesterday, and PCU is an integral part of the long term portfolio.

New site sponsor (Fortuna Silver, FVI.v)

As mentioned previously, I don't just grab the first easy dollar available when it comes to site sponsors. But when it comes to potential junior miners advertisers, I'm triple-picky. So you'll note that one of the stocks that I have recommended previously has decided it's a good thing to have better presence at Otto's humble corner of cyberspace, and as of today is advertising here.

Fortuna Silver (FVI.v) is an excellent long-term investment. I said it before the company decided to advertise here, and I'm saying it now. Out loud. Not only is it a profitable producing miner with oodles of growth baked into the pipeline, but it also has an exemplary attitude towards its staff and its environmental and social surroundings. The respect the company gets from its employees and neighbours is earned, not demanded. This is a corporate attitude that is worth emphasizing, as it is sure to pay great dividends in the future.

By clicking on the ad (or right here) you can check out the company website, and I strongly recommend you do so and find out more about Fortuna Silver. And if you decide to contact the company to find out more, you are sure to encounter a friendly, knowledgeable and helpful IR dep't.

Thank you for your attention.


Obsession with a question

A man with glasses

I spent the afternoon writing about another thing, but I haven't really been able to get the Aurelian deal out of my mind. The whole thing has been going round and round my head, and I keep coming back to the same simple question:

Why has the offer been accepted by ARU mgmt as a friendly bid?

It makes no sense at all when compared to the stated desire of ARU mgmt to maximize shareholder value. And not only that, but there's the whole private placement issue, too. Why does ARU need to raise $71m at this point in time? At such a low PPS? The reasons given were (and I quote) " assist with the development of FDN and for general corporate purposes." The last time i heard (i.e. at the AGM), the $45m at bank was enough to work FDN through 2009! As for "corporate purposes", what kind of going away corporate bash can they put on with $71m to spend on beer and party hats? Nah, sorry....very weak excuses for adding a 10% dilution at favourable terms to the suitor. It stinks to high heaven.

Why has the offer been accepted by ARU mgmt as a friendly bid?

At the AGM just one month ago, CEO Anderson made a big thing about emphasizing there were plenty of drill results to come. This means there's already a sizeable chunk of M+I resource to add to the 14.1m oz Au eq already on the books, and ARU knows it. When the first stink bid comes in, the company doesn't just drop its trousers like this....the company hums and hahs and then says "nope...too low" and then 4 days later releases the new drill numbers and bumps the M+I to 16m oz...or at least something along those lines.

Why has the offer been accepted by ARU mgmt as a friendly bid?

I've just spent half and hour looking over the the agoracom ARU board, because the high quality of posters there is very unusual for a public bullboard (yes guys, that means you). There are many good posts to read, but I'm going to pick up on just one because it reiterates some of the feelings i have above, the numbers look spot on to me, and it says it all in a succint way. The post linked right here is by someone named neuman, and here it is pasted out (they sometimes paste my stuff, so this is fair swaps). Neuman says:


"More on highway robbery"

Posted by: neuman on July 24, 2008 08:34PM

0.317 times 18.7 share price of Kinross on close is $5.93. ARU close at $6.31 implies some value for future warrant but this is not cash today. Say Kinross is going to $75 in five years. Profit on warrant is $43 for each 7 shares of Aurelian, because each share gets 1/7 of a warrant, or $6 per share...if, if and five years!! $6.31 is a stink bid, I agree, but why tender management shares, recommend it, give $42 million guarantee and sell 15 million shares when you do not need the cash to develop a mine? It stinks so loud, that I do not have polite words to describe it. I agree only that the shorts will use this PP to cover,. so the perpetrators of the manipulation are buying the company with management's blessing. I want to believe that Patrick is concerned about the share price, but I've just had a few too many lies from them.

Our beloved Safeharbour is strongly hinting at events to come that will turn us into believers. I respect Safeharbour for all the good work he's done, but is it too good? Is he being too naive? I think so. I was firmly under the impression that the only offer management would accept and fall all over would be a generous one (like Virginia Gold), not a highway robbery that has the affront to publicize a very misleading $8.20 for all to see when reality is ....$6.31. THE MARKET HAS SPOKEN! Look at the stink bid, but do not recommend it, endorse it and wrap it with gifts, diluting shareholder value. What other lies and deception hide behind these latest maneuvers, just before the mining law, withholding results of additional ounces, etc. Sprott and the other funds save us from management, please.


I agree. Well said neuman (I don't know the person, I hasten to add. Just admire the post.). I simply do not understand how this deal could possibly be done with the best interests of shareholders at heart.

Why has the offer been accepted by ARU mgmt as a friendly bid?

So what happens now? Cynical me is guessing the scenario will roughly follow these lines (with plenty of room for variations along the way, of course):

1) KGC make the formal offer

2) People get their abacuses out and find that 35% or so of shares get pledged

3) KGC sweetens the bid...a bit. Maybe edges up the ratio, maybe adds a small slice of cash.

4) Pledges edge up towards 45%

5) KGC makes its final 'take it or leave it' bid. Then ARU completely drops its trousers by allowing the threshold to go to 50% + 1 vote.

6) Thank you, and goodnight. Don't forget to turn off the light on your way out.

Why has the offer been accepted by ARU mgmt as a friendly bid?

I repeat: It makes no sense. You don't maximize shareholder value by caving in on the very first bid. If other bids come it will be despite management attitude, not because of it. So how can they ARU directors possibly say that the deal is (I quote again) "..... in the best interests of Aurelian's shareholders"?

The only reasons I can find are the ones I published this morning. No need to repeat. The only things I want to say to the directors at ARU are the things I've already said. No need to repeat. I'd like to be proved wrong here. I'd like to hold my hands up and say "hot damn, my call sucked on July 24th".

I hope that there's more in the pipeline for shareholders. I hope that ARU mgmt hasn't done what I believe it has done to its long term backers. But hope is not a rational investment strategy. If counter-offers come, then management would have got lucky, that's all. And if luck is the only card they have left to play, it's a woeful situation indeed.

News from "investment grade" Peru

Since mentioning the problem here, in the past 3 days three more children have died from pneumonia as a direct consequence of being exposed to the cold weather. This brings the number of deaths in the Puno province of children under five years of age due to the cold weather to 48, with 30 from the single San Roman district inside Puno. The 48 deaths are included in the 79,029 cases of respiratory infections and 841 cases of pneumonia registered so this year's (southern hemisphere) winter in the Puno region.

A question: Exactly what percentage of GDP or even the U$35Bn (yep, that's billion with a "B") that Peru holds in the Central Bank as international reserves would have been needed to save the lives of those children?

The Peruvian authorities have now issued a "yellow alert" on the problem. Presumably the deaths of 45 children under the age of five was only a "slightly off white" alert, but suddenly 48 is a worry. I presume we'll need to top 100 child coffins before the pieces of shit that run Peru can be bothered to issue a red alert.

Viva investment grade. Viva viva viva

A different opinion on Aurelian

I will say that I want the following to be true, but I don't agree with it. However, the opinion comes from an analyst I highly respect, namely Michael Gray of Genuity Capital, so it's certainly worth giving it more airtime.

For what it's worth, Michael Gray will publish a more extensive note for his clients later on this evening or tomorrow morning, so I don't think I'm being naughty in disseminating this update-style note now. I feel it is in the public interest to get the views of one of the best analysts out there.



· This morning before market open, Kinross and Aurelian announced a friendly take-over bid that values ARU at approximately $1.2 billion. The deal terms are:

· 0.317 Kinross share plus 0.1429 Kinross warrant offered to ARU shareholders (one full warrant at $32.00 = one common share);

· Requires 66.67% of ARU shares tendered; and,

· Management lock-up in place along with a $42 million break fee and right to match competing offers.


· Kinross's take-over bid has an implied value of $8.20/share or a 63% premium to ARU’s 20-day volume-weighted average share price.

· Unanimous offer support by ARU's Board and management.

· Kinross via a 15 million share placement in ARU ($4.75/share) plus lock-up agreement with management means approximately a 12% position.


· Impact – Positive. It was only a matter of time before a producer stepped up to bid on ARU despite the political uncertainty in Ecuador. We believe Kinross must have sufficient in-country intelligence to propel them to make a bid for ARU at this time “pre-new mining law and new constitution.”

· We believe that Kinross's bid will be the start of a bidding war for one of the most coveted undeveloped gold deposits in the world. Although recent comparable transactions have averaged EV of US$140/oz gold (in situ), we apply a significant approximately 30% discount to US$100/oz given the political uncertainty, including the potential for government participation to develop FDN. We also believe Kinross can afford to pay approximately US$200/oz (recoverable). On this basis, we value ARU at $1.78 billion or $11.00 per share, maintain our BUY recommendation, and increase our target price to $11.00.

Michael Gray

Mining Analyst

Genuity Capital Markets

Trading Post (sick little puppy edition)

Minera Andes ( under $1. Whack, whack, whack, whack..............

Breakwater ( under 0.30. Whack, whack, whack, whack..............

PCU...limbo low can you go, joe? This price is far too tempting. Going long here. If you really think it's the end of the copper bull right here right now, then sell me your shares. You're gonna look pretty silly later, though.

At least my fave copper/moly junior Inca Pacific (IPR.v) is putting up a fight today. $1.50 and bits and pieces of trading, too. There are advantages in being a tightly held stock (duh).

FWIW*, I don't think we'll see a counter bid for Aurelian. Kinross (KGC) has made itself the target for the majors by bidding shares (not cash) for Aurelian ( Now the big big players like NEM and ABX can sit back, relax and watch the whole thing unfold. If Fruta Del Norte gets the green light and KGC is shown to have made the right decision, then NEM/ABX/whoever buys out KGC, and gets the prize along with all the other KGC assets. If Fruta Del Norte blows up in KGC's face, then Kinross mgmt will look pretty dumb for blowing the paper equivalent of over a billion dollars, and thenNEM/ABX/whoever will be able to pick up KGC at a bargain fact, KGC shareholders will beg to get the current mgmt roster off their hands.

So Newmont/Barrick etc have a no-lose proposition now. That's why I think there won't be another bid, and the PPS action in Kinross is shouting that at you right now.

*not much

Last post on Aurelian

I've been reading through the reactions of the posters on agoracom. Those people are seriously pissed, and rightly so. And while I'm thinking about it, for the record I've made a profit on ARU but it's the worst and most bitter tasting profit possible.

There's plenty of talk between the agora posters about a possible white knight bid, a bidding war, how this is the start and not the finish and all that jazz. Three things to say about that.
  • Yes, it's possible.
  • This KGC bid is so low that it's unlikely we'll ever see true value handed to shareholders anyway, even in a bidding war. I mean, from the $7 right now, can we honestly see bids ratcheting up to the $15 to $20 range?
  • Most importantly, no matter whether there is another bid or not, be very clear that ARU treats this offer as a friendly bid. That should be first and foremost. You understand that, and you see how ARU has sold out. I therefore propose the following:
Take note of the following names, because these are the names of the board of directors at ARU. And if you ever see these names on the board or managerial roster of any other mining company, don't go near it. Avoid it. Put a big red flag against the name of that company. Because these people will chicken out, screw you over and sell you down the river again. They may be good geologist, metallurgists and what-have-you, but that won't mean squat when they screw you again, dear retail investor. Leopards and spots.

William Fisher (Chairman and Director ARU)
Patrick Anderson (President, CEO and Director ARU)
Colin Benner (Director ARU)
Jon Douglas (Director ARU)
Andre Gaumond (Director ARU)
Joseph Hamilton (Director ARU)
Thomas Obradovich (Director ARU)
Jonathan Rubenstein (Director ARU)

It's in your best interest to take note of these names. Fool me once, shame on you. Fool me twice, shame on me. This isn't the first time a junior mining company has been raped by the capital markets and it won't be the last. But it's a particularly bad example of the game, and it's in your own best interests as a small investor to protect yourself from the people on this list in the future.

Another message to the directors and managers of Aurelian Resources (

I'm not joking.


Fu*k you

Of all the junk in the ARU PR this morning......

.......this is the part that made me vomit the hardest:

"....BMO Capital Markets and Dundee Securities Corporation, Aurelian's financial advisors, have provided oral opinions to the Aurelian Board of Directors that the consideration offered is fair, from a financial point of view, to Aurelian's shareholders."

Aurelian lost its nerve and took the small change offered by the big boys. They got sweet-talked into selling the world greatest untapped gold deposit by its financial advisers who have spent the last three months making sure the stock was whacked down and stayed down at bargain basement levels.

The only hope left for the true brave hearts (not the bunch of total cowards who pretend to be acting in the best interest of shareholders) is that Newmont comes along with the white knight offer. After all, that's what the very same ARU management have been telling people off the record. We're supposed to be happy about a KGC stock-plus-warrant deal? You can look your loyal and long term shareholders in the eye, put your hand on your heart and say this deal is fair to Aurelian shareholders?

BULLSHIT, BULLSHIT AND A THOUSAND TIMES BULLSHIT. You'll be remembered as the bunch of geologists who got the largest screwing from the money guys this decade. The most pathetic and cowardly managerial decision i've had the displeasure of witnessing in years. And although i'll be rooting for a white knight bid, you guys on the board don't deserve it.

UPDATE: Go have a look at the agoracom Aurelian message board (linked here) and find out if the shareholders themselves agree that the deal is fair. You may note a slight discrepancy between ARU mgmt's version of reality and honest people's version of reality, perchance????

Message to the directors and managers of Aurelian Resources (

Fu*k you

Why are junior miners so cheap right now, anyway?

This is kinda long and rambly, but that's the way it has come out. So be it. In the last couple of days I've had various meetings with various miner-y people in crappy, godforsaken, sunless, dank and miserable Lima*. Luckily the people I spoke with are far more charming than the city itself and I'd like to thank them all for their time (they know who they are). The single thing all the chats, formal and informal, had in common was "why are juniors so cheap right now?" Here's what I learned:
  • Everyone was stunned into amazement by Otto's sharp analysis and explanation of the current PPS situation.
  • What they didn't know was that the hat Otto left at the table while going to the toilet/dessert buffet table/outside for a phone call was, in fact bugged.
  • I therefore overheard them saying "That Otto is a loud-mouth, know-nothing jerk" and things to that effect.
  • But we'll just ignore that, and go back to my sparkling analysis, shall we?
What with the seven types of financial mayhem in the States (ABCP, fannie, freddie BSC, Indymac, and all their cousins and second cousins) the debt market has totally frozen. This means that those junior miners (especially the explorers) need to do placements and dilute the outstanding share numbers in order to raise the necessary money to continue operations. Without access to freely flowing credit, options on raising money have been cut to one. And my stars, don't the Canadian market controllers know it! Here's an example: A few days ago, somebody wrote to me and pointed me towards Virgin Metals (, an interesting little explorer with two promising molybdenum/copper plays in Mexico. The share price has been whacked and whacked down to its current 11c price.....
....and the project is "worth" far more than that. But what happens is that if the markets know...I mean KNOW...that Virgen is running out of exploration funds, and at any given moment it will dilute the share base by X million shares, they sell sell sell the stock. Therefore when it's time to go to market, instead of picking up $3m in funds by placing 20m shares at 15, the company is forced into selling 30m shares at 10 to get the needed moolah. So the stock gets hammered again down to 5c before the next tranche, and suddenly there's another 50m shares on board...etc etc. So for those wanting to make money out of this, the answer is to whack these shares down, down and down again. Screw that explorer into the ground.

And then down some more. is just one of many, and it's really unfair to pick on that stock right now. Look at how Candente Resources ( has been whacked. Look at Baja Mining ( There are literally hundred of stocks out there getting screwed into the ground by blatant, full-on capitalist vultures in Vancouver and Toronto because they know these small explorers can choose between the placement market and nothing. Whack...whack...whack again.

There are even worse examples. Look at Nilam Resources (NILR.ob). It has gone from $2.15 to literally pennies because it lost the right to buy into its main deal in Peru.
And it lost that right because the company couldn't raise a piddly $3m. What happened was that it had a lender all lined up but because the market became so uncertain the lender backed out, leaving Nilam in the lurch. So the vendor pulled out, leaving Nilam with basically bog all. Result? PPS death spiral.

The good news is that this cannot last forever. So when the worm turns (and eventually it will), expect two things:

1) The rebound in these beaten down juniors will be extremely fast (to the point of vengeance), because current market caps on these things bear no relation whatsoever to the asset value of these companies.

2) Those screwing them on the way down will have filled up at the bargain basement prices and will make even more money on the way back up.

These Canadian top dog bullyboys can't lose, frankly. The whole of the Canadian markets are wildly twisted in favour of the big players anyway. Little guys are just the cannon fodder for them. Against these odds, the only way to beat them is to buy cheap and hold through the bullshit. The strong hands will make money. They always do.

*Question: Why does one of the most stunningly beautiful countries in the world have the most insipid and drab capital cities? All explanations gladly received.


Anatomy of a Canadian Stock Promotion (part 1)

This is an introductory post to a new series that your loving and giving Otto will be rattling out in the weeks and months ahead. Y'see, I've identified a stock that will be given a full commercial stock promotion routine over from now to about the spring of 2009. The idea is the comment on the development of the promo, how it's being presented to the retail audience, what the central players stand to gain, how their exit strategy looks to be set up and all things related. The idea is that maybe along the way we can learn a bit as to how these stocks make a few people rich and eave a lot of others holding bags. And then once you have identified the pattern, you can use it to your own advantage the next time round. Cos in the stock promo game in Canada, there's always a next time.

I'm not going to reveal the name of the stock yet, but that'll come in the very near future. What I'll say right now is that it has all the ingredients for a good promo vehicle:
  • A junior explorer-stage miner
  • Excellent prospects at its new prospects and concessions
  • A team well versed in stock promotion
  • The promotion techniques I'm expecting the company to use will be (and I want to stress this) 100% legal.
So for today we'll leave it all mysterious and spooky. In the days to come, I'll start outlining the company and its structure and how I think the future promotion will come to pass (more or less).

Resignation Sweepstakes: We have a winner!

Well I nailed this one, dudes and dudettes. Alberto Fernandez was 8/11 fav then went 1/4 white hot favourite over the weekend after Otto got the real freshly squeezed juice from deep inside the Klishtina gov't circles. Yes indeed....yet again you read it here first.

Here's the link to how Bloomie broke the news about Alberto's stepdown to people who don't read the pace-setting IncaKola. What's left to decide is if Guillermo "patota" Moreno is set for more time with his family soon. Watch this space......


On the road

I'm dropping in on the urban scrawl known as Lima for two days and a night as of today (very early flight, movers to shake and shakers to move, dudes), so posting may be patchy til Thursday. Then again, it may not. I might find myself waiting four hours in a hotel room for a meeting that was programmed for 6pm and happened at 10:30pm like the last time I was there, thus giving me a ton of time to play at writing.

Checked your water bill recently?

How would fifty million dollars for water affect your household budget?

That's what water licences are now fetching in the North of Chile, a place where the abundance of copper is offset by a near total lack of water. This article in Chile's Diario Financiero goes into the details, but numbers like paying U$100,000 per litre-per-second of water are pretty mind boggling. There's a whole new industry of water finders springing up in the area, as deep wells are still substantially more economical to use than desalination/pumping plants (apparently).

Big regional copper miner Antofagasta (ANTO.L) recently annouced that cash costs per Lb copper would soon be touching $2.00. With water costs shooting through the roof, it's not really surprising.


Mo Money Evo (or Morales hands out the gas bonanza fairly and leaves critics looking stupid)

I'm getting a bit obsessed with Bolivia's finances. This post is the third time I've picked at the subject, but the reason I keep coming back is because the facts about how Evo is running the country are so mismatched to the stories told about his administration. The juxtaposition is quite fascinating (for a wonky dude like me, anyway).

In this first post, the subject was the general macro overview of the country.

This second post was about the unmitigated success story of Bolivia's hydrocarbons nationalization and how the Evo gov't is being smart with the new-found revenues.

So today's third post kinda ties the fiscal background to current politics, and specifically looks at how the hydrocarbons revenues are being distributed inside Bolivia. This is because amongst the so-called "half-moon" states (departments) of East Bolivia (namely Tarija, Santa Cruz, Beni and Pando) one of the linchpins of the autonomist arguments is that they don't want their gas and oil tax revenues (known as 'IDH') from "their" gas and oil fields to be spread around the country. It's not fair, they say. Racist bastards I say, but instead of just fighting their fire with fire let's have a better look at the IDH revenues and how they are being spent.

To begin with, let's point you back to the second post in the Bolivia money series linked above and say that some of the hydrocarbons moolah is going to state reserves. That's smart, and nobody can deny it. Secondly, the gas money also funds the new "renta dignidad" state pension. This means that for the first time ever, Bolivia pays a true pension to its 800,000 or so citizens above the age of 60. The Bs200 (about U$27.75) per month may not sound like much to you, but the calculators say it has lowered national poverty levels by a full 2%. To say it's a popular decision amongst Bolivians is like saying the Pacific Ocean is a challenging swim.

So now let's get to the point, and here's a chart that shows the amount of money handed to the nine departmental authorities by the national government in the last four years.

It must be pointed out that at this time the 2008 figures are still estimates, but as oil and gas prices have risen sharply since the beginning of the year when these figures were budgeted, it's nigh on certain that every cent will be handed over on schedule.

The first thing to note is that the gas-rich state of Tarija gets by far the most money from the IDH payments. It's then followed by Santa Cruz. This is because the gas is produced in these regions, and not a question of population density. For example, Tarija department has around 4.4% of Bolivia's approx 9.1m total population but gets 32.9% of the 2008 IDH budget. And to put that into context, at the current exchange rate of Bs7.2 = U$1, that adds up to U$798 per capita in Tarija, which compares to the state pension of U$333 per annum (yeah, you worked it out again; doesn't seem much to you, but that's serious buying power in Bolivia).

Secondly, note how every single department is receiving significantly more IDH money than in 2005 (pre-Evo). In fact if we look more closely at the four "half moon" states.........

..........we see that in the period 2005 to 2008, Tarija's revenues have increased by 104.4%, Santa Cruz's revenues by a whopping 190.9%, Beni's by 128.9% and Pando's by 139.3%. This kinda makes the half moon authorities look stupid about complaining, doesn't it? Or perhaps miserly? Or perhaps we should just get it over with and call them the manipulating lying pieces of shit that they really are.

So when supposedly neutral organizations such as the International Crisis Group call upon Evo Morales to suspend the state pension payments because it isn't fair on the departments who are looking to break away from the national government, it kind of makes those dudes look stupid too, doesn't it? To quote the influential ICG in its latest report:

"The government should provisionally stop taking IDH money away from the departments to finance its new pension fund (Renta Dignidad)...."

Or maybe...just maybe...these supposedly neutral third party observers have their own agenda to fill as well. Whatever, but the facts blow the suppositions out the water when it comes to Bolivian finances. And once again I'm left thinking, "Wow, a real live anti-imperialist revolutionary Socialist with a capital "S" who is being careful and smart with a nation's finances." It's certainly a refreshing change, no matter what your politics are.

Trading Post

Rumours about RIO buying FCX are not going away round here, despite the denial-that-was-not-a-denial by Vale spokesperson Friday. The persistent nature of the jungle drum is interesting. Stock is up nicely today. I didn't get my lowball fill Friday, so still totally neutral about all stocks involved, FWIW.

Juniors may be getting low volumes, but there's plenty of green on my screen., MDR.v, LA.v, IPR.v, FVI.v and plenty others. Pick your own favourite.

SIL moving up with the silvers. Has this thing finally found a bottom? No real opinion on the stock valuation, and I still remember the total mauling the mgmt got at its conference call. Made me wince to listen to the Wall St suits whack the SIL guys and how they didn't have the specific answers on hand time and time again . I mentally pegged it "revisit in 2009" after listening, but a 13% rise right now (from rocky rock bottom PPS, must be said) does pique the interest.

Argentina's Merval index is having a great day. Pampa Holdings ( is leading the charge along with other beaten down utilities (TRAN, CEPU) and banks (FRAN, BMA, GGAL) These local names getting a relief rally on the gov'ts decision to abandon the export tax fight.
If it were anywhere near being a serious country there would be a whole hatful of cheap stocks to recommend. But it isn't, so extreme caution is needed. Telecom Argentina (TEO) is still my idea of "best of a bad lot".

Gold Hawk (CGK.v) Positive developments at Coricancha

Things are starting to move forward for Gold Hawk Resources (CGK.v). Previous posts on the company (start here...the other links are found in this post) give you the full rundown on the problems it has had with its tailings dump, but today a news report from a respected Peruvian media service states that the tailings are now being removed. Rather than give you my take on things, here is my translation of the Spanish language report available right here.


Tailing Relief Work Inspected at San Mateo de Huanchor

Lima 21/07/2008 (CNR). The Vice Minister of Mines, Felipe Isasi, visited the district of San Mateo de Huanchor, located in the province of Huarochirí (Lima) that faces a possible collape of the Coricancha tailings pond.

Isasi oversaw the start of transfer operations for the tailing to a provisional tailings dump with the objective of reducing the weight in the tailings ponds 1 & 2 at Tamborauqe hill, where the San Juan Mine, owner of the site, operates.

The functionary (Isasi) then went to the Chinchay zone, where the tailings will be transferred to a provisional tailings pond, with the proviso that a Environmental Impact Study is completed to enable a permanent tailings zone.

For this operation, an access road to the North of the tailings dump has been built to allow easy access for the vehicles that will transfer the tailings.

Ruperto Cáceda, president of the commitee for the defence of the environment and sustainable development (CODEMADES) of San Mateo, alerted a few days previously that the tailings pond, with capacity for up to one million tons of tailings, was built on another reservoir. Because of this, in the event of a collapse the River Rimac would be polluted with arsenic, lead, cadmium, other heavy metals and toxic substances.

In such an event, a flooding of the residual material would also affect three railway lines, a part of the Central Highway and a hydroelectric power station, all of which would cause an ecological and social crisis in the zone.


All this can only be good for CGK.v. With tailings now being moved to a provisional dump, and the Environmental study being expedited by the gov't, the worst seems to be over for the company. I'm now looking forward to the time CGK can announce it is going back to work and employing the 600 people currently laid off at the mine. This will not only suit the company, but the Peruvian authorities, too.

Net Servicos earnings (and a 3rd party reco you can trust more than Otto)

Net Servicos (NETC) has been pointed to as a buy here on several occasions, and released its earnings Friday after the bell (here's the PR). The best phrase for them is 'in line', and today the stock opened down very slightly on low volumes. In other words, no surprises to the upside or downside from this set of results.

To prove I'm not alone in my estimation of NETC, here's the stock update published this morning by Luis Azevedo of Bradesco Brazil. I'm also purposely including his telephone and e-mail details so that if you feel like it you can get in contact yourself. You'll also note his price target on the stock is 75% above today's quote...I think that's pretty fair, personally.



Target Price: R$35.50
Last Price: R$20.49

Higher Customer Additions Compromised Margins

NET Serviços has released its 2Q08 results, showing higher-than-expected customer additions, but with lower margins. For all business lines NET posted stronger net customer additions than expected. However, a more aggressive campaign increased sales expenses, thus lowering margins. Consequently EBITDA came in at R$232mn, just 1.2% below our estimate but +3% QoQ and +18% YoY, yielding an EBITDA margin of 26.0% versus our estimate of 27.0%, and down from 27.1% in the previous quarter and 28.0% in the 2Q08. Notwithstanding, it is important to note that despite the drop, the company’s margins were still at a level the company views as healthy for continuous growth (between 26% and 28%).

Strong net adds across the board. Net additions for pay TV services in 2Q08 rose to 148k, 70% above our forecast and 72% higher than 1Q08. The company ended 2Q08 with 2.71mn pay TV customers, +17.6% YoY. Broadband net adds climbed to 210k, 20% higher than our estimate and 27% over the previous quarter. NET ended the quarter with 1.80mn broadband customers, +61% YoY. Voice customers reached 982k, compared to our estimate of 829k, with net additions of 264k users over the quarter - 177% growth YoY. We understand the difference to be from stronger net adds for a new product targeting lower-income classes (112k).

Better-than-expected customer base boosted revenues, especially for the VoIP product. NET’s ARPU for the quarter was R$135, +7% YoY and just 0.2% below our estimate. Gross revenues from subscriptions were just 0.6% below our estimate. However, this was offset by higher-than-expected revenues from the VoIP service (R$94.1mn vs. our estimate of R$69mn). As a result, net revenues rose to R$891mn, 2.3% above our estimate and +7.4% QoQ and +28% YoY. On the cost side, operating costs were R$418mn, 1.2% above our estimate (because of higher labor costs). The biggest impact on results came from higher sales expenses due to a greater marketing effort for the VoIP product (R$91mn, versus our estimate of R$73mn). Nevertheless, this was partially offset by lower bad debt provisions of R$7.5mn, versus of our estimate of R$13.3mn.

There was a slight improvement in the churn rate, which for pay TV reached 15.4% (over the last 12 months), from 16% in the previous quarter and 14.4% in 2Q07. In the broadband segment the churn rate reached 17.9%, from 18.0% in 1Q08 and up 290bps YoY.

Research Analysts:
Luis Azevedo
55 11 2178 5321

Evo misses the bullet

The Copter

Yesterday afternoon, a helicopter crashed in the Cochabamba region of Bolivia. All people on board, four Venezuelan army personnel and a Major in the Bolivian army, died in the crash. The Super Puma copter which normally carries up to 20 people was on loan to Bolivia from Venezuela, and is the same one that transports President Evo Morales around Bolivia on his frequent trips to visit towns cities villages.

This is the second crash involving loaned Venezuelan helicopters in Bolivia. But it's the closest one to becoming an enormous international incident, as Evo used the very same helicopter to travel to Cochabamba that morning.

Funny how many Latin American presidents get involved in air crashes, innit?


Regional stories they forgot to mention

Argentina: Alberto Fernandez is now 1/4 favourite for the chop in our resignation sweepstakes game (looks like I can pick'em). Guillermo Moreno also rumoured to be out, but less certain.

Bolivia: Tom Shannon heads up a US delegation arriving in Bolivia tomorrow. He says he wants to "understand the country." 7 1/2 years into an 8 year Bush administration.....let's be generous and say "better late than never", eh?

Chile: The Chaiten volcano is doing its smoke-blowing routine again, and flights to the South of the country have been suspended for fear of clogging engines with ash. Here's a previous post on Chaiten with some spectacular photos.

Peru: From the dept of "we care a lot"; 45 children have died from the cold in the Puno region, 28 from one single district (San Roman). Three reminders: 1) Peru is considered investment grade by the world's capital markets. 2) 40% of Peruvians live under the poverty line. 3) That poverty line is an income of U$2 per day. What's your idea of poor?

Ecuador: The US ambassador to Ecuador, Linda Jewel, states for the record that the US does not believe Studmuffin has ever helped the FARC. She also says, "(Correa) has made much more effort than previous governments to protect the frontier with Colombia." She was also overheard whispering that he has great buns.......but we're still not sure about that we won't mention it.

Colombia: Shakira is smaller than Uribe and thinner than Alan Garcia, but they all want the FARC to free hostages.
The phrase "rose betwixt two thorns' has never had better use.

Uribe wisely stood next to her to look tall for once, and also wisely gave her the mike for the anthem-singing bit, too.

Venezuela: To "strengthen ties", Hugo is thinking about starting a bi-national bank with Russia. Y'know, while the normal media lapdogs feed you tales about the H man buying russky subs on his impending trip to Moscow, the people behind the scenes will be far more concerned about this move.

Gold Hawk Resources (CGK.v) could be a smart buy here

The tailings pond at Coricancha (highlighted in red)

"I don't care what they say about me, just make sure they spell my name right."
P.T. Barnum

In a couple of recent posts (this one is the most complete, and then this was a follow-up) I wrote about the trials and tribulations of Gold Hawk Resources (CGK.v) and the tailings dump problems at its Coricancha mine in Peru. Well the word is spreading, and as well as innumerable reports in Spanish I've just ripped this page off of Google by plugging "gold hawk" into the engine:

Business News
AOL Canada, Canada - 1 hour ago
VANCOUVER - Gold Hawk Resources Inc. (TSXV:CGK) said Friday the Peruvian government has issued an emergency decree for a hillside near its Coricancha ...
Toxic materials threaten water in Peru
The Age, Australia - 16 hours ago
The mine is owned and operated by Canadian miner Gold Hawk Resources Inc. In a statement late on Saturday, the company said the government has asked it to ...
Peru fears environmental mining disaster
AFP - 21 hours ago
The Lima government on Friday declared a state of emergency after the dump, located at Coricancha mine and owned and operated by Gold Hawk Resources Inc., ...
Business News
AOL Canada, Canada - Jul 19, 2008
VANCOUVER - Gold Hawk Resources Inc. (TSXV:CGK) said Friday the Peruvian government has issued an emergency decree for a hillside near its Coricancha ...
Posted 4 hours ago
Brantford Expositor, Canada - Jul 19, 2008
GOLD HAWK RESOURCES INC.(TSXV:CGK) said Friday the Peruvian government has issued an emergency decree for a hillside near its Coricancha processing plant ...
Peruvian government issues emergency decree near Gold Hawk plant
660 News, Canada - Jul 18, 2008
VANCOUVER - Gold Hawk Resources Inc. (TSXV:CGK) said Friday the Peruvian government has issued an emergency decree for a hillside near its Coricancha ...CVE:CGK
Peru Orders Canada's Gold Hawk to Relocate Some Mine Operations
Bloomberg - Jul 18, 2008
By Alex Emery July 18 (Bloomberg) -- Canadian miner Gold Hawk Resources Inc. said Peru's government ordered the company to relocate some facilities at its ...CVE:CGK
Peruvian Government Issues Emergency Decree Regarding Ground ...
Market Wire (press release) - Jul 18, 2008
Gold Hawk is reviewing the Emergency Decree and is preparing a certified English translation that it will make available. Spanish speakers may access the ...CVE:CGK - TSE:X
Nuinsco Resources Limited Issues Early Warning Report Regarding ...
MarketWatch - Jul 17, 2008
Prior to closing the Acquisition, Nuinsco did not own any securities in Gold Hawk. Therefore, following the Acquisition, Nuinsco now owns 29920000 Shares, ...TSE:NWI - CVE:CGK -

That's a lot of inches for a small miner with one 600tpd plant and a current market cap of $20m.

As mentioned before, the biased press calling CGK irresponsible is in itself irresponsible. In fact, CGK has been pretty exemplary as a corporate citizen and has been doing the right thing all the way through this period of bad news. So now that the Peru gov't has issued an emergency decree for the troubled tailings plant and things are actually going to get done around Coricancha, CGK has a good chance to make itself better known in the investment community.
Some of the cracks showing in the tailings wall, as photographed this week

I'd be encouraged to see the company coming forward and being straight and open with the world, because it really has nothing to hide in this episode. If CGK points to the good standing it has with the vast majority of the local community around its plant and highlight the good work that it has been doing, this promising junior currently selling at a fraction of its true worth could well find a silver lining amongst current clouds.